Question

Matty Kaminsky owns a new Volvo. His June monthly interest is $400. The rate is 8 ½%. Matty's principal balance at the beginning of June is (use 360 days):

Answer 1

Answer:

$56,470.59

Explanation:

We need to calculate the principal amount  at the beginning of June

Data:

Interest (I) = $400

Rate(r) = 8.5%

Time(t) = 360 days

Solution:

We can calculate the principal amount by rearranging the Interest calculation formula

Formula: I = Prt

Note; Where P in the formula is the principal amount

Now rearrange the formula in order to find principal

P = I/rt

P = $400/(0.085)x(30/360)

P = $400/(0.085)x(0.08333333333333)

P = $400/(0.00708333333333

P = $56,470.59

Note: we only need to find the principal balance of June so we will consider only 30 days of June out of 360 days.